Polluting coal-fired power stations will not be paid long-term subsidies to help keep the lights on, officials have confirmed.
Green campaigners had raised concerns that the "capacity market", which will provide payments to energy generators to ensure there is enough power on the system to meet peak demand, would give up to 15 years of subsidies to old coal plants.
Coal plants which undertake refurbishment to clean up pollutants, though not their carbon emissions, can bid for payments - and environmentalists warned that that a loophole in the rules would allow them to receive the long-term contracts.
Greenpeace said the capacity market could see billions of pounds paid to the UK's polluting coal plants to generate electricity up to the 2030s, when the country should be slashing carbon emissions from the power sector to tackle climate change.
But the Department of Energy and Climate Change (Decc) has now said it is clarifying the rules to ensure that long-term payment deals will only be provided for new projects, with existing plants only able to apply for payments for up to three years.
"We are going to amend the capacity market rules to clarify that only new projects can access the 15-year maximum term,” said a spokeswoman for the department.
"This was central to getting state aid approval and we will amend the capacity market rules to clarify without any doubt that only genuine new projects can access the 15-year maximum term. We will be consulting on this shortly."
With no new coal plants able to be built without technology to capture and permanently bury their emissions, the move effectively rules out long-term payments for conventional coal power.
Existing coal fired plants would still be able to bid for one to three-year contracts, which could lead to hundreds of millions of pounds paid to the coal power sector, Greenpeace said.
But Decc said the capacity market was not expected to stop the move away from coal, with remaining coal plants increasingly taking a back-up role as the price of carbon pollution and low-carbon power increase, making cleaner generation cheaper to run.
Last month, an assessment by environmental groups put the UK joint top in Europe for the most polluting coal plants, with nine power stations in the top 30 across the European Union for carbon emissions.
Greenpeace UK energy analyst Jimmy Aldrige said: "The idea that super-polluting old coal plants should get billions in subsidies for the next 15 years is so indefensible that the Government has little choice but to close this loophole.
"One colossal waste of bill payers' money has now been ruled out, but the Government is still offering ageing coal plants other subsidies worth hundreds of millions, putting our climate ambition at risk and locking us into more years of dependence on coal, the dirtiest of all fuels.
"A much better use of this money would be to invest in clean, sustainable ways to help keep the lights on such as cutting energy waste and building interconnectors with Europe, storage, and smart demand management."
More than a third of UK electricity was generated by coal in 2013, with two-fifths of the coal imported from Russia, official figures have shown.